Building Blocks to Achieve Sourcing Credibility

"Building Blocks to Achieve
Sourcing Credibility"
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June 8, 2011 at 11AM (EST)

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Keynote Speakers Moderator

Copyright © Iasta, All Rights Reserved

Audience Profile


Credibility

 Definition of credibility… TRUST

 Your reputation is:

 You have the expertise

 You bring out the best in people

 You work well with others

 You focus on important issues

 You listen and communicate well


Four Tactics


Tactic #1: Choose your path wisely

 Do not oversell cost reduction

 Work with stakeholders that are open to collaboration

 Get quick wins and sell it internally


Mini Case Study Choose your path

Internal
Workflow
Analysis

Core Challenge:
Lack of spend info & savings
to justify acquisition

Priorities Goals

 Lesson Learned: By analyzing and grading projects based
on key criteria, teams can quickly determine how to prioritize
their projects; leaving behind a proven methodology for
planning strategic initiatives in the future.


Mini Case Study Choose your path
Consumer Products
What went wrong… Manufacturer

 Selected indirect projects by spend
size as top factor

 Some 1st projects were “sacred cows”
 Marketing data, media buys
and 3rd party financials audit

 Sourcing engagement used to train Commodity Managers

 Backfired, sourcing lost credibility

 Lesson Learned: Companies should only source
“sacred cows” after credibility has been built.

Tactic #2: Identify and understand the data

Know your Know your Know your
spend key metrics key suppliers

Past, current
How much is For critical
& scheduled
there categories
projects

How much is Influence their
influenced by Savings performance
sourcing via SPM

Success
stories of
spend


Tactic #3: Manage the gaps

Skills gap • Right people with the right skills

Data/Visibility • Spend/Contract data
• Supplier performance, risk & mgmt
gap • Creates the conduits for effective internal communication

• Understand goals and objectives of stakeholders and map
Influence gap procurement to them
• Build relationships / walk the halls

Communication • Bridge the disconnects and break down legacy issues
• Understand that finance can be your greatest ally
gap • Deliver the results with effective descriptions

• Translate the value to the stakeholders
Culture gap • Responsibility is on Procurement to disclose the value to
the organization or you will not get buy in


Tactic #4: Develop a Center of Excellence

 Technology and tools

 Spend analysis
 Contract Management
 Sourcing (RFx, optimization)
 P2P

 Creates the IQ of the organization – essentially the nerve
center for a best in class process

 Build the organization discipline for evolutionary cycles
which generate greater spend under management


Mini Case Study Center of Excellence

 Avoid stop-and-start rollout program

 Maintain momentum:
 Targets
 Bespoke training
 Reporting/ tracking KPI’s

 New technology & rollout program:
 One view of truth
 New Strategic Sourcing Group
 Increased knowledge transfer

 Lesson Learned: Create a strategic plan and collaborate
with other business units to create sourcing center of
excellence.

Summary

 Credibility is not built overnight

 Next Steps…

1. Spend Analysis
• Will help you fill data gaps
• Will help you know your data
• Will help you choose your path

2. Center of Excellence
• Centralize technology
• Business processes
• Empower people


Q&A

 Please submit your questions…


Question 1

 Are there methods to measure the effectiveness or
productivity of category managers?
 Yes- quite a few – anything from:
• # of categories
• #of events held
• Overall spend in those particular categories
• How that category translates into new and emerging
products


Question 2

 How long did it take before FirstGroup plc started realizing
savings and gaining an ROI?
 Within the first 3 months (wave 1), we started seeing benefits of
the sourcing program. We split the project phases into wave 1,
wave 2 and wave 3.
 As we went through the ways, the projects became more
technically difficult; savings took longer to implement.
 We didn’t see 100% of savings in an award position until about
12 months later.


Question 3
 Relative to your chart regarding average
savings by category, have you noticed any
significant changes or trends in what people
are frequently doing and if the are any
changes in the savings on average?
 The numbers in these charts are from research we
did 6-7 months ago.
 The biggest difference is about how the service
providers / vendors have added more savings into the
bucket and also the different variety of categories.
 More demand management techniques are being
applied
 Some categories have gone up and some have gone
down- it all depends on:
• Organization’s maturity
• Collaborating with stakeholders
• Working with 3rd party providers and how they bring
about value add


Question 4

 What are some tips to help sourcing teams take over some
unmanaged spend in non-traditional areas such as Legal
and Finance?
 Develop relationships with those people
• Work out their influences and identify decision makers in each of those sourcing
groups
 Select a project that might have little impact on their daily lives,
but allows you to demonstrate a big impact on something they
have overlooked.
• Example: office equipment

 Approach legal about helping them manage their contracts
better and improve compliance
• Use their language to better improve your credibility


Question 5
 Can you give some examples of selling sourcing credibility?
 Procurement’s job is to sell situational influence, not positional
leverage.
 The purpose of procurement is to lead internal customers to a
logical conclusion about what is ultimately in the best interest of
the organization.
 When presenting your business case about a large opportunity in
a particular category:
• Use data gained from spend analysis.
• Meet with everyone in that department.
• Present the data in terms of questions such as, “How would you approach this if we
worked together?”
• If they say they want to get back to you and schedule another meeting – the credibility
and selling; you don’t need to go in banging your shoe on the table and
trying to take over the initiative to drive down cost.
• Identify the problem, mitigate the risk and look for the threats in real-time.
• Let the stakeholders give you feedback on the best way to approach the
initiative and develop a secondary idea (if needed).


Question 6

 In your opinion, what are 1-2 key activities (that have
greatest impact in the least amount of time) that
procurement can do to set the foundation of credibility?
 Communication is always king.
• As a sourcing pro, you need to be involved in every aspect of communication that
is taking place on a project you are working on.
• If you are unaware of the discussions taking place about your project, it could
present a lot of problems.
 Obtain strong support before escalating to executives.
• Communicate and collaborate with departmental leadership / key stakeholders
before reaching out to the business owners; get them on board to support the
initiatives you are pursuing.


Question 7

 What are some good tactics or methodology for performing
an honest assessment of a sourcing teams skills so that
they know what the next steps should be?
 Gartner recently fielded a study about sourcing talent- we will
have additional data the end of August. What we are asking
goes above and beyond an assessment:
• What have you done in the last couple of years?
• What are you doing today?
• Where do you want to go in the future?

 Ask what you need to make your team successful.
• Do you need more category managers?
• Do you need more advocates in the business?
• Do you need different financial perspectives?


Question 8

 When publishing savings results, how do you avoid the
potential embarrassment of stakeholders who were
historically paying a higher price?
 A lot of it is around sharing with those stakeholders that you found additional savings
based on their initial work and identifying the additional benefits from the new
sourcing process.
 Explain that you found a new path to take with suppliers that takes costs out that you
hadn’t identified previously.
 Take a team approach- as Dave said- it’s about situational influence, not positional
leverage.
 Stay to the facts; know where you are going and you will not make an embarrassment
out of the organization.
 Show that you have done this together and that the combined efforts jointly delivered
value; it shows you are a good team and can come together.


For more info

Iasta Global HQ Iasta European HQ
12800 N. Meridian St. Hartham Park
Suite 425 Corsham, Wiltshire
Carmel, IN 46032 SN13 0RP
United States of America United Kingdom

Operations: 317.594.8600 Operations: +44 (0) 870 199 4060
Sales: sales@iasta.com Sales: +44 (0) 1249 700726

www.Iasta.com

eSourcing | eSourcing |
forum Iasta Alliance Group wiki

www.eSourcingWiki.com www.LinkedIn.com www.eSourcingForum.com www.Twitter.com/Iasta.com


Related Materials…
 White Papers
 Iasta's Structured Rollout Plan for eSourcing Initiatives
 Spend Analysis: It's what you don't know that costs you

 Case Studies
 Kicking Off a Procurement Transformation Initiative
 Uncovering, Articulating and Implementing Sourcing Goals through Best Practices

 eSourcingForum
 Use Best Practices to Drive Procurement Credibility at the C-Suite NEW

 What Language Are You Speaking NEW

 eSourcingWiki
 Sourcing Leadership


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